If you have 10% chance to lose -$91 and 90% chance to get +$10, the expected value in money is -$0.1. It sounds bad.
But the relationship between utility and money isn't linear. If for you, $10 is worth 10u and $91 is worth only 89u, this deal has expected value of +0.1u.
Why and how isn't it linear? It's a hard problem that can't be answered easily. However we know it's true for most big institutions in stock and bond markets. A financial product will need to provide extra expected value in term of money to compensate the risk, otherwise no one buys it.
But the relationship between utility and money isn't linear. If for you, $10 is worth 10u and $91 is worth only 89u, this deal has expected value of +0.1u.
Why and how isn't it linear? It's a hard problem that can't be answered easily. However we know it's true for most big institutions in stock and bond markets. A financial product will need to provide extra expected value in term of money to compensate the risk, otherwise no one buys it.